What Do I Need to Do to Be SCA Compliant?

In January 2018, the second Payment Services Directive (PSD2) came into force. This was introduced to increase consumer protection, improve payment security and prevent fraud. From 14 March 2022, Having 3DS V.2 will make your business SCA compliant. If you don’t yet have this, speak to your payment gateway provider.

What’s Strong Customer Authentication (SCA)?

All electronic payments, whether face to face or remote, require SCA. This means a customer must authenticate their payment using at least two independent factors:

Possession – something only you have.

For example, your mobile device registered with your issuing bank or a hardware token that has been issued to you.

Inherence – something only you are.

For example, your fingerprint, iris scan or other form of biometric that can uniquely identify you.

Knowledge – something only you know.

For example, a unique passphrase or identification number this is known only to you.

FIXLINKS here Further information on PSD2 and SCA can be found within our Blog section. You’ll find our whitepaper called ‘The changing face of card payments’ and our blog called ‘Payment Services Directive 2 (PSD2)' there.

Does SCA apply to all transactions?

• Chip and PIN transactions already adhere to SCA
• Contactless payments are exempt, however, a new decline code is being introduced that will ask the cardholder to complete a chip and PIN transaction if extra security is required (see the Face to Face Transactions section)
• Unattended parking and transport terminals are exempt
• All other unattended devices are required to support chip and PIN
• Mail Order and Telephone Order (MOTO) transactions, Recurring Transactions and Merchant Initiated Transactions (Stored Credential Transactions, also known as Credential on File Transactions), are out of scope for SCA but need to be flagged correctly (see the MOTO and Merchant Initiated Transaction section)
• Ecommerce transactions require SCA (see the Ecommerce Transaction section)
• Anonymous transactions (pre-paid cards) - not subject to the SCA mandate
• International transactions – it may not be possible for UK-based customers to apply SCA to transactions when the card issuer isn’t located in the European Economic Area (EEA), but you should still attempt SCA for all transactions

How’s my business affected by SCA?

The changes you need to make for SCA depend on the type of transactions you process. Please refer to the following sections to see what you need to do.

1. Chip and PIN transactions already comply with the SCA requirement for two factor authentication. Your customer is in possession of their card and know their PIN.
2. Transactions made using a mobile device, like a mobile phone also comply with SCA as the customer is in possession of their phone, and use a fingerprint to uniquely identify themselves.
3. Contactless transactions don’t fulfil the requirement for two factor authentication but are exempt from the SCA requirement. However, additional security requirements may be requested by the card issuer. A new decline code is being introduced that will ask the cardholder to complete a chip and PIN transaction where that extra security is required.

What do I need to do?

If you rent your terminal from us, we’ll make the changes for you. Just ensure that you and your staff understand what’s happening and be ready to reassure cardholders that there’s no problem with their card or their account, just that it’s an extra security check requested by their card issuer.

If you own or rent your terminal from another source, contact them immediately to discuss the decline code changes needed for the step up from a Contactless to chip and PIN transaction. Details of the technical requirements for SCA can be found in our PSD2 and Strong Customer Authentication Technical Implementation Guide.

MOTO and Merchant Initiated Transactions

1. While MOTO and Merchant Initiated Transactions (Stored Credential Transactions, also known as Credential on File Transactions, where card details are stored for future use), are out of scope for SCA, if the card issuer doesn’t know they’re one of these kinds of transactions, they may request SCA. If the cardholder is unable to provide the necessary authentication, the transaction will be declined.

What do I need to do?

It’s critical that all transactions are flagged correctly.

If you rent your terminal from us or use our E-Commerce Platform, we’ve made all the necessary changes to ensure transactions contain the correct flags.

If you own or rent your terminal from another source or use a third party provider for your ecommerce service, contact them immediately to ensure your transactions are flagged correctly.

Further information on Stored Credential Transactions and details of their technical requirements can be found on our website within our Customer Centre under the Stored Credential Transactions tile. They’ll also need to apply the technical requirements, which can be found in our PSD2 and Strong Customer Authentication Technical Implementation Guide.

Ecommerce Transactions

1. Payments made via a website require SCA. These transactions must now support 3D Secure, which is the ecommerce authentication protocol by the Card Schemes, such as Mastercard and Visa. This allows the cardholder to authenticate themselves as the genuine holder of the card. Under PSD2, card issuers are obliged to challenge and potentially decline transactions that don’t comply.

A new version of 3D Secure (3D Secure 2 – 3DS2) has been introduced to comply with new regulations and provide a better customer experience, more security for your business and a frictionless payment experience. Read our blog called ‘3D Secure 2 – A Beginner’s Guide’.